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Book distributor HB Fenn initiates bankruptcy

The Canadian publishing industry is rattled by the news that HB Fenn has initiated bankruptcy proceedings. But the company’s demise is not seen as entirely representative of the broader picture.

Fenn, the country’s largest, Canadian-owned book distributor, filed notice Thursday of its intention to initiate bankruptcy proceedings. The Bolton, Ont.-based company has been hard hit by the reduction in its distribution business, much of it lost in 2009 to U.S.-based multinational Hachette Book Group. The emergence of e-books and shrinking profit margins were also cited, in a release issued by the company.

The scaling back of operations at Key Porter Books last year was the first sign of trouble for distributor HB Fenn. (THE CANADIAN PRESS PHOTO)

“We have worked extremely hard to build the company and keep it going even under today’s adverse conditions,” read a statement by CEO Harold Fenn, who founded the company in 1977. “My heart goes out to our over 125 employees and to the many publishers we represent, as well as the customers that have supported us over the years.”

All Canadian publishers are suffering to one extent or another from price discounting and the emergence of digital reading, but the reliance on distribution makes Fenn a particular — although not exclusive — case.

“This is an extreme example of what can happen with some of the challenges that the industry is facing right now, but I don’t think it’s the tip of the iceberg or the first domino or anything like that,” said Carolyn Wood, executive director of the Association of Canadian Publishers, an umbrella organization representing more than 125 publishers.

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“Fenn was an unusual business in some ways,” she added. “This arises out of the loss of the Hachette business a couple of years ago. That was a really body blow. Replacing business like that takes a long time and the market is not so forgiving these days to allow that kind of time.

Under the Bankruptcy and Insolvency Act, Fenn has 30 days to file a proposal to its creditors. During that time, it can continue to operate without interference.

The first signs of trouble at Fenn emerged last year, when the company scaled back operations at publishing subsidiary Key Porter Books. Last month, Fenn suspended operations at Key Porter entirely.

According to the company website, it represented 40 publishers and distributed more than 50,000 titles.

Key Porter Books, founded in 1979 by Anna Porter and purchased by Fenn in 2004, represented the publishing arm of HB Fenn. In its heyday, Key Porter published works by such notable Canadian authors as Joan Barfoot, Margaret Atwood, Farley Mowat and Dennis Lee. In recent years, its lists have thinned.

“It’s a sad day in Canadian publishing,” said Kim McArthur, president and publisher of McArthur & Co., an independent Canadian publisher that also relies heavily on distribution revenues. “This could be us. It’s been very difficult.”

McArthur said her company is still scrambling after losing two-thirds of its distribution business to Hachette. She urged the federal government, which intervened to prevent the foreign takeover of Saskatchewan’s potash industry, to show similar vigilance toward the Canadian book business.

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“Possibly this will be a wake-up call for the government,” McArthur said. “They can’t just continue to slumber on in whatever coma they’re in.”

Key Porter’s assets are already being picked over by other Canadian publishers. McArthur recently purchased the back catalogue to a series of Atwood children’s books formerly owned by Key Porter, with the promise of a new title to come.

“All publishers are working through the Key Porter lists of assets,” McArthur said. “And agents are in conversation with all kinds of publishers.”

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